1200-13-20-.06 - FINANCIAL ELIGIBILITY DETERMINATIONS

1200-13-20-.06. FINANCIAL ELIGIBILITY DETERMINATIONS

(1) Modified Adjusted Gross Income (MAGI) Financial Eligibility Determinations.

(a) All applicants for TennCare will have their income calculated for eligibility purposes according to the MAGI-based requirements at 42 C.F.R. § 435.603. The only exceptions are the Medicaid applicants at 42 C.F.R. §§ 435.603(j)(1)-(6).

(b) In compliance with 42 C.F.R. § 435.603(g)(1), there is no resource or asset test for individuals whose income eligibility is required to be determined using MAGI income requirements.

(c) There is no resource or asset test for pregnant women or children enrolled in CoverKids.

(d) In compliance with 42 C.F.R. § 435.603(g)(2), there are no income or expense disregards for individuals whose eligibility is determined according to MAGI requirements, with the exception of those described at 42 C.F.R. §§ 435.603(d)(1) through (4).

(e) Household composition, for financial eligibility determination purposes, for Child MAGI, Pregnancy MAGI, Caretaker Relative MAGI, TennCare Standard Uninsured, TennCare Standard Medically Eligible, and CoverKids categories will be determined using the MAGI methodology in accordance with 42 C.F.R. § 435.603(f). Household composition for all other categories will be determined according to this Chapter. MAGI household composition methodology is based on federal tax rules and the principles of tax dependency, however the MAGI rules apply to both applicants who expect to file taxes or be claimed as tax dependents, and to those applicants who do not file taxes or are not claimed as tax dependents. Each applicant has his own household size constructed under MAGI rules, and it is permissible for applicants who live in the same household to have different household sizes.

1. Tax Filers.

(i) For applicants who expect to file taxes, the household includes the tax filer and any dependents the tax filer expects to claim.

(ii) For applicants claimed as tax dependents, the household is the same as the tax filer claiming the tax dependent. Tax dependents may include individuals not otherwise eligible for Medical Assistance, and who are not applying for benefits. If a non-custodial parent claims a child as a dependent, the dependent child will be included in the non-custodial parent's household size.

(iii) For married couples who live together, each spouse will always be included in the other spouse's household, regardless of the couple's tax filing status.

(iv) For married couples who expect to file joint taxes but live separately, each spouse will be included in the other spouse's household.

(v) There are three exceptions to the tax filer rule for applicants claimed as tax dependents. An applicant who meets any of the following is subject to the non-filer household composition rules:

(I) The tax filer is someone other than the applicant's spouse, or natural, adopted or step parent; or

(II) The applicant is under age nineteen (19), or twenty-one (21) if a fulltime student, and is claimed as a tax dependent by one parent, but her parents live together and do not file a joint tax return; or

(III) The applicant is under age nineteen (19), or twenty-one (21) if a fulltime student, and expects to be claimed as a tax dependent by a non-custodial parent.

2. Non-Filers. Applicants who do not file taxes are subject to the non-filer household composition rules. The non-filer household includes the applicant and if living with the applicant:

(i) The applicant's spouse;

(ii) The applicant's natural, adopted and step children under age nineteen (19), or twenty-one (21) if a full-time student;

(iii) For applicants under age nineteen (19), or twenty-one (21) if a full-time student, the applicant's natural, adopted or step parent; and

(iv) For applicants under age nineteen (19), or twenty-one (21) if a full-time student, the applicant's natural, adoptive and step siblings who are under age nineteen (19), or (21) if a full-time student.

(f) The household size for a pregnant woman includes the number of children she is expected to deliver (the unborn child(ren)). The household size for other applicants in a pregnant woman's household does not include the unborn child(ren).

(2) AFDC-Related Financial Determinations.

(a) Coverage groups whose financial eligibility is determined according to AFDC-based methodologies are:

1. Medically Needy Children; and

2. Qualified Medically Needy Pregnant Women.

(b) Income Determinations. Income for individuals described in this paragraph is calculated according to the AFDC cash assistance program's income definitions and policies (Rules 1240-01-04-.12 and .14-.19, and 45 C.F.R. § 233.20). Unless otherwise specified below, these individuals are subject to the following income requirements:

1. ABLE Accounts. Contributions made by a third party, including a trust, and ABLE account earnings are excluded, except that contributions are not deducted from countable income of the individual making the contribution. Distributions from an ABLE account are not income of the designated beneficiary in any month regardless of whether the distribution is for non-housing QDEs, housing QDEs or non-qualified expenses. A distribution from an ABLE account is the conversion of a resource from one form to another.

2. Adoption Subsidies. Payments to an individual from state adoption assistance programs or Title IV-E funds for special needs children are excluded.

3. Alimony Received. Countable.

4. Annuity Payments. If the underlying annuity is an excluded resource, the periodic payments are countable unearned income. If the underlying annuity is a countable resource, payments are excluded.

5. Assistance Payment from another state. Countable.

6. Bonuses. Countable.

7. Cancelled Debts. Excluded.

8. Capital Gains. Countable.

9. Cash Inheritance. Countable.

10. Cash Support. Countable, unless excluded as infrequent or irregular income.

11. Census Payments. Excluded.

12. Child Support Payments. Countable, both current payments and arrears.

13. Child/Spousal Support Transferred to IV-D Agency. Payments transferred by the household to DCS as assigned support are excluded.

14. Combat Pay. Excluded.

15. Commissions. Countable.

16. CSIMA. Countable as unearned income only when the institutionalized individual is not in the community spouse's household.

17. Contractual Payments. Countable.

18. Death Benefits. Countable income to an individual if the total amount exceeds the expense of the deceased person's last illness and burial paid by the individual to whom the death benefit is issued.

19. Deferred Wages. Countable when the income would have normally been received if the wages are deferred at the employee's request. Countable when received if the wages are deferred by the employer.

20. DIMA. Countable as unearned income only when the institutionalized individual is not in the dependent's household.

21. Differential Payments. Countable.

22. Domestic Volunteer Service Act Payments. Payments made to volunteers under the Domestic Volunteer Service Act are excluded, unless the Corporation for National and Community Service (CNCS) determines that the value of the payments, based on the number of hours served, are equal to or greater than the federal or state minimum wage where the volunteer is serving, whichever is higher. This includes payments made to foster grandparents, senior companions, and persons serving in the Retired Senior Volunteer Program (RSVP) and Americorps VISTA.

23. Dwelling-related Assistance. Excluded if housing assistance is provided by HUD or USDA's Rural Housing Service.

24. Earned Income Tax Credits. Excluded.

25. Earned In-Kind Wages. Countable.

26. Educational Income. Excluded. Includes: Pell Grants, Federal SEOG, Federal Student Loans, State Student Incentive Grants, Work Study, and any student financial assistance received under Title IV of the Higher Education Act of 1965, as amended, or under Bureau of Indian Affairs education assistance programs. Other grants, scholarships, fellowships, or gifts are excluded to the extent they are used or set aside for educational expenses.

27. FF/TANF Payments. Excluded.

28. Farming Income. Countable.

29. Fishing Income. Countable.

30. Gambling Prizes and Awards. Countable.

31. Gifts. Cash gifts are countable unless excluded as infrequent or irregular income.

32. Income Not Pursued. Excluded.

33. Income Produced from Resources. Income generated by an excluded resource is countable unearned income. Income generated by a countable resource is excluded as income.

34. Inheritance Cash. Countable.

35. Interest Income. Interest earned on a countable resource is excluded as unearned income. Interest earned on an excluded resource is countable as income, unless specifically excluded under a Federal statute.

36. Interest on Burial Funds and Spaces. Excluded.

37. Irregular or Infrequent Income. Up to $30.00 of unearned or earned income received infrequently or irregularly per quarter is excluded.

38. Jury Duty Pay. Countable unless the income is turned over to an applicant's employer.

39. Long Term Care (LTC) Insurance Payout. Payments from long term care insurance used for medical care are excluded.

40. Low Income Home Energy Assistance Payments (LIHEAP). Excluded.

41. Military Allotments. Cash allowances paid to active-duty service members and their families for housing, food, clothing and special circumstances count as earned income in the month of receipt. The basic allowance for subsistence (BAS), paid to military personnel to offset the cost of meals, counts as earned income. The basic allowance for housing (BAH) counts as earned income when the payment is made to military personnel living in private housing. When the BAH is paid to service members living on base or in privatized military housing and the allowance is paid and deducted from the service member's pay in the same month or paid directly to the housing contractor, the BAH is excluded.

42. Older Americans Act Benefits. Count only wages and salaries paid to individuals as a result of their participation in a program funded under Title V of the Older Americans Act of 1965 as earned income. Benefits received under Title VII, Nutrition Program for the Elderly, of the Older Americans Act of 1965, as amended, are excluded.

43. PASS Income. Any earned or unearned income received and used to fulfill an approved plan to achieve self-support is excluded.

44. Payments from FEMA. FEMA payments issued as a result of presidentially declared emergency or major disaster are excluded. Payments made by comparable disaster assistance programs by States, local governments and disaster assistance organizations are also excluded. FEMA payments which are made to a household to pay for rent, food and utility assistance when there is no major disaster or emergency declaration are countable.

45. Pensions. Countable.

46. Protective Payee Payments. Funds received by a protective payee (conservator, authorized representative or representative payee) and used for the care and maintenance of a third party beneficiary (adult or child) who may or may not be a member of the protective payee's household are excluded as income to the protective payee. Any part of the payment that is retained by the protective payee for her own use is countable income to the protective payee. Even if the protective payee retains a fee for her services, the entire payment issued on behalf of the beneficiary is countable income to the beneficiary.

47. Railroad Retirement Payments. Countable.

48. Reimbursements. Reimbursement of expenses an employee incurs in the performance of his duties for items other than normal living expenses are excluded.

49. Rental or Lease Income. Countable as earned income when the individual is actively engaged in producing such income, or bears some responsibility in earning the income. Countable as unearned income when the individual is not actively engaged in producing the income, or bears no responsibility in earning the income. Count the amount of income remaining after expenses related to maintaining the property are excluded.

50. Royalties and Honoraria. Countable.

51. Self-Employment Income. Net earnings are countable.

52. Settlements and Restitutions. The following settlements and restitution payments are excluded as unearned income:

(i) Agent Orange Settlement Payments;

(ii) Alaska Native Claims Settlement Act exclusions;

(iii) Criminal Victims Compensation Funds paid to crime victims;

(iv) Distribution of perpetual judgment funds to Indian tribes under the following:

(I) Black Feet and Gros Ventre Tribes (P.L. 92-254);

(II) Grand River Band of Ottawah Indiana in Indian Claims Commission Docket No. 40-K;

(III) Indian Judgment Funds Distribution (P.L. 93-134);

(IV) Receipts from land held in trust by the Federal government and distributed to certain Indian tribes under P.L. 94-114;

(V) Tribes or groups under P.L. 93-134; and

(VI) Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation (P.L. 95-433).

(v) Filipino Veterans Compensation Fund Payments. Lump sum payments made to certain veterans and spouses of veterans who served in the military of the Government of the Commonwealth of the Philippines during WWII;

(vi) German Reparation Payments;

(vii) Japanese-American and Aleutian Restitution Payments;

(viii) Payments made to individuals because of their status as victims of Nazi persecutions;

(ix) Payments to children born of Vietnam veterans diagnosed with spina bifida; and

(x) Revenues from the Alaska Native Fund paid under section 21(a) of the Alaska Native Claims Settlement Act.

53. Severance. Countable.

54. Sheltered Workshop. Countable.

55. Sick/Disability Payments. Countable.

56. Social Security Payments. Countable.

57. Social Service Payments. Excluded.

58. SSI Payments. Excluded.

59. Supplemental Nutrition Assistance Program (SNAP). The value of a SNAP benefit is excluded. The value of free or reduced food under WIC or the National School Lunch Act is also excluded.

60. Temporary Disability Payments. Income is countable as unearned income to the extent it is not a reimbursement for specific costs and is paid directly to the applicant or any member of the applicant's household.

61. Tips. Countable.

62. Trusts. Money withdrawn from the body of a trust or interest and dividends accrued to the trust and paid to the individual is countable.

63. Unemployment Compensation. Countable.

64. U.S. Department of Veterans Affairs Payments. Educational benefits, VA Aid & Attendance, and VA payments from Unusual Medical Expenses are excluded. VA Disability and VA Pension payments made to a veteran are countable. Augmented VA, Apportioned VA, and VA Survivor (DIC) payments are countable for the dependent spouse, child or parent for whom or to whom the benefits are paid.

65. Wages. Countable.

66. Work Study Payments. Excluded.

67. Workers' Compensation. Countable as unearned income to the extent it is not earmarked and used for the purpose for which it is paid (i.e., medical bills or legal expenses).

(c) Resource Requirements. Resources for individuals described in this paragraph are calculated according to the AFDC cash assistance program's resource definitions and policies (Rules 1240-01-04-.05, .07, .09 and .10; 42 C.F.R. §§ 435.840 and 435.845; and 45 C.F.R. § 233.20). Individuals described in this paragraph are subject to the following resource requirements:

1. ABLE Accounts. ABLE account balances and distributions from an ABLE account for a QDE are not a countable resource of the designated beneficiary. Distributions from an ABLE account are countable as a resource when:

(i) Distributions are retained past the month of receipt for non-qualified disability expenses;

(ii) Qualified disability expenses (QDE) are expenses related to the blindness or disability of the designated beneficiary and for the benefit of the designated beneficiary. In general, a QDE includes, but is not limited to: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, funeral and burial expenses, and basic living expenses.

2. Annuities. An annuity is a countable resource when it is revocable, assignable, or if it can be sold.

(i) If an annuity is an excluded resource, payments being received from the annuity are countable unearned income. If the annuity is a countable resource, any payments being received from the annuity are excluded.

(ii) The countable resource value of an annuity is its Fair Market Value (FMV). If the applicant is able to provide the FMV of the annuity, verified by two (2) credible sources in the legitimate business of selling and purchasing annuities, accept the verified value.

(iii) If the applicant does not provide two (2) credible statements of FMV, multiply the total annual payment by the period remaining to determine the countable value. If the period of the annuity is based on an annuitant' s lifetime, the annual payments are multiplied by the annuitant's life expectancy, according to SSA's Period Life Table. If the annuity is a "period certain" annuity, annual payments are multiplied by the annuitant's life expectancy or the period certain, whichever is less. The calculated value of an annuity may be rebutted by providing two (2) credible statements of FMV amounts.

3. Business or Self-Employment. Excluded as essential for the production of earned income. Such excluded resources may include:

(i) Tools/equipment;

(ii) Stock or raw materials;

(iii) Personal property essential for income production;

(iv) Real property;

(v) Office equipment;

(vi) Business loans for the purchase of capital assets;

(vii) Inventory;

(viii) Machinery and equipment;

(ix) Business/commercial checking accounts; and

(x) Life insurance.

4. Burial Contracts or Policies. Excluded. This does not include pre-paid or pre-need burial agreements.

5. Burial Plot. Exclude one burial plot per household member.

6. Prepaid Burial Agreements or Burial Trusts. Exclude one burial agreement or burial trust with equity value of $1, 500.00 or less per family member.

7. Cash. Countable.

8. Certificate of Deposit (CD). Countable if held in a personal account. The value of a CD is the net amount that could be received after penalties for early withdrawal, if applicable. Taxes are not deducted in determining value.

9. Checking Account. Personal checking accounts are countable. Other checking accounts may be excluded if designated for burial needs, educational income, Individual Development Accounts, PASS, prorated as income, proceeds from the sale of a home, disaster or settlement funds and retroactive SSA payments.

10. Contract for Deed or Mortgage. The value of a contract for deed or mortgage may be a countable asset depending on the circumstances of the loan, including the individual's role as lender or borrower and the accessibility of the asset:

(i) When the individual is the lender for a contract for deed, the lender may sell or transfer the instrument to have immediate access to the unpaid principal. The value of the contract is the unpaid loan principal. Any portion of a payment that represents the loan principal is a conversion of a resource. Any portion of a payment that represents interest is considered unearned income in the month of receipt and a resource thereafter. The value of the contract may be excluded from countable resources if the individual can demonstrate that the contract cannot be sold without his realizing a net loss.

(ii) If the individual is the borrower, the property agreement is not a resource. However, the property purchased may be a countable resource following the month of transaction.

11. Educational Income. All educational income is excluded as a resource, including student financial assistance received under Title IV of the Higher Education Act and the Bureau of Indian Affairs. The individual must be enrolled in school and attending classes to be considered a student. Grants, scholarships, fellowships and gifts other than those previously listed intended to pay for tuition, fees or educational expenses are excluded as a resource.

12. Farm, Business or other Equipment. The equity value of non-self-employment income-producing real property, other than the homestead, is countable. If the property is used for self-employment, it is excluded as Business or Self-Employment.

13. Home and Lot. The entire value of the home, whether on land or water, and lot and all adjoining land not separated by property owned by others and any related outbuildings are excluded in determining resource eligibility, as long as the home is the principal place of residence for the applicant/enrollee. Temporary absences from the home do not affect the home's exemption, as long as the individual intends to return home at a specified time.

14. Household Goods and Personal Effects. Excluded.

15. Individual Development Account (IDA). Up to $5, 000.00 in the account is disregarded as a resource as long as the individual complies with the IDA eligibility rules and continues to maintain or make contributions to the account.

16. Income-Producing Resource. Countable if accessible to the individual.

17. Sick and Disability Insurance. Excluded.

18. Burial Insurance. Excluded.

19. Items of Unusual Value. Exclude up to $2, 000.00 of all total personal items of unusual value. If the individual's equity value in one or more than one item of unusual value is greater than $2, 000.00, the amount that exceeds $2, 000.00 is countable towards the resource limit.

20. Life Estates:

(i) Property in which an individual holds a life estate is subject to the same exclusion rules as property the individual owns by title, subject to the following exceptions:

(I) A life estate will be excluded as the home when the property meets the home exemption.

(II) A life estate will be excluded when ownership is necessary for the production of earned income. See Business or Self-Employment in this Subparagraph.

(III) The terms of the life estate contract prevent the holder from selling her interest in the property.

(ii) If the life estate is not excluded based on the criteria above, the entire value of the life estate is a countable asset. The life estate value is determined by multiplying the fair market value of the property by the percentage listed in the "Life Estate Interest Table" for the age of the individual on whose lifetime the life estate is based. If more than one person owns the life estate, the value is based on the owner with the longest life expectancy.

21. Life Insurance. Excluded.

22. Livestock. The value of livestock necessary for business or self-employment, as a tool of the trade, or raised for home/personal consumption is an excluded resource. Income received is countable as self-employment income. Livestock that is used as non-business, income-producing property is countable.

23. Oil and Mineral Rights. May be included with land ownership or owned separately. If surface rights of the same property are excluded (for example, as a home) so are oil and mineral rights. Oil and mineral rights are countable when owned for personal use, or when the surface rights of the same property are countable (non-homestead, real property).

(i) If oil or mineral rights are producing income under a lease agreement, the owner may be constrained from selling or otherwise disposing of those rights. If the land is already excluded, then oil and mineral rights are also excluded.

(ii) If oil or mineral rights are producing income to the individual, and he is not actively engaged in the production of income, the equity value of the rights is countable.

24. Personal Use Resource. Countable unless excluded based on the terms of the asset. A personal resource is typically for the use of the individual and/or his family.

25. Personal Consumption. Exclude as a resource the equity value of a non-business property used to produce goods or services essential to daily activities.

26. PASS. Income an SSI recipient places in an approved PASS account is excluded as a resource. The PASS account itself is also excluded. This exclusion expires when the PASS contract expires or ends, or when the individual is no longer an SSI recipient.

27. Proceeds from the Sale of a Home. Excluded to the extent that the funds are intended to be used to purchase another home subject to the homestead exclusion, and the funds are used for such a purpose within three (3) months of the date of receipt of the proceeds.

28. Promissory Note and Other Loans. A promissory note or other loan given by the household is considered personal property and is countable, unless the note/ loan balance is inaccessible or the promissory note is held for reasons other than personal use. The lender holds legal interest and has the legal ability to make available her share in the note or loan. The equity value of the note/loan is countable.

29. Prorated as Income. Excluded.

30. Real Property. The equity value in all real property the individual owns individually or jointly is a countable asset with the following exceptions:

(i) Property excluded as the homestead;

(ii) The inaccessible equity value of real property;

(iii) Equity value of income-producing property;

(iv) Real property necessary for the production of earned income (see Business or Self-Employment in this Subparagraph); or

(v) Real property excluded under a Conditional Assistance agreement between the individual and the State. The individual must make a bona fide effort to sell the property at its current market value, and repay the State for medical expenses covered by TennCare during the exclusion period with the proceeds of the sale. Exemption of the real property is not to exceed nine (9) months. Only one (1) parcel of property may be excluded under a Conditional Assistance agreement per period of eligibility.

(I) Repayment of medical expenses covered by TennCare may not exceed the total of the net proceeds. Any proceeds remaining after repayment to the State are considered a resource.

(II) If the property remains unsold after nine (9) months, the property is considered inaccessible so long as bona fide efforts to sell the property continue.

31. Rental property. Countable if the individual who owns the property is not 'in the business of' renting property. Someone who is in the business of renting property is someone who materially participates in the operation and decision making of the rental business for at least twenty (20) hours per week.

32. Retirement Accounts and Pension Plans. Excluded up to $20, 000.00. Money held in an IRA, 401(K), or Keogh in excess of $20, 000.00 is countable, minus any penalty for early withdrawal. Pension funds that are not accessible are excluded as a resource. If the pension becomes accessible due to retirement or termination it becomes a countable resource.

33. Savings Account. Countable if it is characterized by personal use. If the current month's income has been deposited into the account, it must be excluded when determining the current value of the account. A savings account may be excluded if it is used for one of the following purposes:

(i) Burial funds;

(ii) Business or Self-Employment;

(iii) Educational Income;

(iv) Individual Development Account;

(v) PASS;

(vi) Proceeds from the Sale of a Home (subject to time limits);

(vii) Prorated as Income;

(viii) Settlement or Disaster Payment, if Excluded by Policy; or

(ix) SSI/SSA Retroactive Payment (subject to time limits).

34. Settlement or Disaster Payment. Payments or benefits provided under certain Federal statutes are excluded, if payments are not commingled with other funds. Excluded settlement and/or disaster payments include:

(i) Agent Orange Settlement Payments (and interest from payments);

(ii) Disaster Relief Assistance received under the Disaster Relief Act of 1974;

(iii) Distribution of perpetual judgment funds to Indian tribes under the following:

(I) Indian Judgment Funds Distribution (P.L. 93-134)

(II) Black Feet and Gros Ventre Tribes (P.L. 92-254)

(III) Grand River Band of Ottawah Indiana in Indian Claims Commission Docket No. 40-K;

(IV) Tribes or groups under P.L. 93-134;

(V) Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation (P.L. 95-433); and

(VI) Receipts from land held in trust by the Federal government and distributed to certain Indian tribes under P.L. 94-114.

(iv) Factor VIII or IX Concentrate Blood Products Litigation. The settlement payments (and interest from payments) made as a result of the class action lawsuit to hemophilia patients infected with HIV through blood plasma products;

(v) Filipino Veterans Compensation Fund Payments. Lump sum payments (and interest from payments) made to certain veterans and spouses of veterans who served in the military of the Government of the Commonwealth of the Philippines during WWII;

(vi) Japanese-American and Aleutian Restitution Payments (and interest from payments);

(vii) Payments made to individuals because of their status as victims of Nazi persecutions (and interest from payments);

(viii) Payments to children born of Vietnam veterans diagnosed with spina bifida (and interest from payments);

(ix) Payments made under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (interest is not excluded);

(x) Revenues from the Alaska Native Fund paid under Section 21(a) of the Alaska Native Claims Settlement Act;

(xi) Criminal Victims Compensation Funds paid to crime victims (excluded for nine (9) months); or

(xii) Energy Employees Occupational Illness Compensation Program Act (EEOICPA).

35. SSI/SSA Retroactive Payments. Excluded for nine (9) months after the payment is received and countable after the nine (9) month exclusion period.

36. Stocks, Bonds and Mutual Funds. Countable if asset is held for personal use. Stocks, bonds or mutual funds may be excluded if held for the purposes listed below:

(i) Burial;

(ii) Business or Self-Employment;

(iii) Educational Income;

(iv) Proceeds from the Sale of a Home;

(v) Prorated as Income; or

(vi) Settlement or Disaster Payment, if Excluded by Policy.

37. Tools of the trade. Excluded when essential for the production of earned income.

38. Trusts. Countable or excluded, when the applicant or household member is either the trust's trustee or beneficiary, based on the nature of the trust, the date the trust was created, the source of funds used to create the trust, plus other factors as specified in 42 U.S.C. § 1396p(d).

39. Vehicles. Exclude up to $4, 600.00 of the equity value of one (1) vehicle in the applicant's household. The equity value of any other vehicle is countable, unless the vehicle can be excluded based on its use. The equity value of recreational vehicles (boats, snowmobiles, jet skis, ATVs and aircraft) is a countable resource.

(d) Disregards and Expenses Allowed. For purposes of determining the income of individuals described in this paragraph, the following expenses will be disregarded from their income:

1. Child Support Disregard. Disregard $50.00 per month per household if a child living in the home receives child support payments (current only).

2. Earned Income Disregard. Disregard $90.00 per month from each household member's total earned income.

3. Payments made on Behalf of Dependents within the Home. Disregard up to $175.00 per month of day care expenses per dependent age two (2) or older. Disregard up to $200.00 per month of day care expenses per dependent under age two (2).

4. Student Income. Disregard the earnings of a full-time student who works part or full time. Disregard the earnings of a part-time student who works part time. Earnings of a part-time student who works full time are not to be disregarded.

(e) Household composition for TennCare Medicaid Medically Needy categories is based on the principle of FRR.

1. For unmarried applicants, the following individuals are included in the applicant's household for Child Medically Needy, if living in the home:

(i) The applicant;

(ii) The applicant's children under age twenty-one (21);

(iii) The applicant's unborn child(ren);

(iv) The applicant's natural or adoptive parents; and

(v) The applicant's siblings who are under age twenty-one (21) (including unborn children).

2. The Child Medically Needy applicant's parent(s) are not included if the applicant is an emancipated minor.

3. For married applicants, the following individuals must be included in the applicant's household for Child Medically Needy, if living in the home.

(i) The applicant;

(ii) The applicant's children under age 21;

(iii) The applicant's unborn child(ren); and

(iv) The applicant's spouse (if under age 21 and applying for Medical Assistance).

(v) When the applicant's spouse is living in the home and is over age 21 or under age 21 and not applying for Medical Assistance, the spouse's income and resources are deemed to the applicant. When income and resources are deemed from a spouse, the household size will be increased to account for the deemed spouse.

4. The Child Medically Needy applicant's step parent living in the home is not included in the child's household.

5. The following individuals must be included in the Medically Needy Qualified Pregnant Woman applicant's household, if living in the home:

(i) The pregnant woman applicant;

(ii) The applicant's unborn child(ren);

(iii) The applicant's spouse, if under 21 and applying for Medical Assistance; and

(iv) The applicant's children under age twenty-one (21).

(v) If the applicant's spouse is living in the home and is over age 21 or under age 21 and not applying for Medical Assistance, the spouse's income and resources are deemed to the applicant. When income and resources are deemed from a spouse, the household size will be increased to account for the deemed spouse.

6. Parents of a pregnant woman applying for TennCare Medicaid Medically Needy Qualified Pregnant Woman coverage are not included in the applicant's household.

(f) Spenddown.

1. Applicants must produce proof of relevant medical expenses in order to "spend down" monthly income to the TennCare Medically Needy Income Standard (MNIS) to be eligible in a Medically Needy category. If income is below the MNIS, spenddown will not be necessary. Applicants may reduce available monthly income with countable expenses, as listed below, in order to qualify for eligibility in the Medically Needy categories. The income limits for the Medically Needy category are published in the State Plan.

2. Countable Expenses. The following Rules apply to the expenses that may be used to meet spenddown:

(i) Countable expenses incurred during the month of application, whether paid or unpaid.

(ii) Countable expenses paid during the month of application, regardless of when such expenses were incurred.

(iii) Countable expenses incurred during the three (3) calendar months prior to the month of application, whether paid or unpaid.

(I) Expenses paid during the three calendar months prior to the month of application will not be counted unless such expenses were also incurred during those three calendar months.

(II) Any expenses incurred before the three (3) calendar months prior to the month of application will not be counted unless payment is made on those expenses during the month of application, in which case only the amount paid during the month of application is counted.

(III) When a Medically Needy enrollee has been eligible for twelve (12) months, he will be expected to meet spenddown again as described in this section, except verified expenses that are documented in the enrollee's Medicaid record can be carried forward to the next year as long as the individual remains continuously eligible, the expenses remain unpaid, and the bills are not written off by the provider. Only the portions of expenses that were not previously used to meet spenddown can be carried forward to the next eligibility determination. If an enrollee loses eligibility at any point, the carry forward of unpaid medical expenses ends and the enrollee must meet spenddown as if he were a new applicant.

(iv) All medical expenses are considered incurred the date the service is provided with the following exception: medical expenses related to maternity care (e.g., global fee) are considered incurred the month the physician presents a bill once services have begun (i.e., initial examination by the physician at a minimum).

(v) If spenddown is not met by the medical bills incurred as of the date of application submission or as of the date of submission of a renewal application during redetermination, the daily countable medical expenses incurred during the application month will be added until spenddown liability is reached.

3. Incurred or paid expenses for the following individuals may be considered countable expenses for purposes of determining Medically Needy financial eligibility:

(i) The applicant;

(ii) Members of the applicant's household;

(iii) The applicant's FRRs or anyone for whom the applicant is financially responsible; and

(iv) Individuals not living in the applicant's home or eligible for inclusion if the applicant's household member or the applicant's FRR is legally obligated to pay their medical expenses.

4. Countable expenses are those for which the individual is still liable and that are:

(i) For medical or remedial care, including costs for over the counter medications and costs incurred for medical insurance premiums, co-payments and deductibles. Health insurance premiums may be deducted as a spenddown expense only when payment is due, even if paid in another month;

(ii) Verifiable and for which the individual provides substantiation;

(iii) Incurred by eligible individuals and are the legal responsibility of a household member and not subject to payment in full or part by a third party;

(iv) Recognized under State law but not covered under the State's TennCare Medicaid plan or waiver (continuously eligible individuals); or

(v) Covered under TennCare Medicaid but incurred during the spenddown period (new applicants).

5. The following list includes but is not limited to the types of medical expenses that are considered Countable Medical Expenses for the Medically Needy categories:

(i) Acupuncture services.

(ii) Bed hold at a Long Term Care Facility (Medicaid rate).

(iii) Dental expenses.

(iv) Doctor's fees. Includes fees from services rendered by practitioners and others providing medical services, physicians, surgeons, dentists, optometrists, chiropractors, osteopaths, podiatrists, psychiatrists, psychologists, and Christian Science providers.

(v) Drugs prescribed by a physician (prior to TennCare eligibility). Includes charges for medicines and drugs prescribed by a doctor incurred prior to establishing TennCare Medicaid eligibility and which remained unpaid or paid in the month under consideration (i.e., spenddown month).

(vi) Guide dogs. Guide dogs for the blind or deaf and the costs of their maintenance.

(vii) Hospital charges.

(viii) Medical care charges included in tuition costs. Charges for medical care included in the tuition fee of a college or private school which is paid on a monthly basis, provided that a breakdown of the charges is included in the bill or is furnished separately by the institution.

(ix) Nursing home costs.

(x) Nursing services. Nursing services include nursing care in an individual's home, if for the purpose of treatment or alleviation of a physical, mental, or emotional disorder and ordered by a provider acting within the provider's scope of practice. The care needed must be medical, e.g., administering medication or therapy. Cost of services solely domestic in nature, such as the preparation of meals and the performance of housework, is not deductible.

(xi) Organ transplant expenses.

(xii) Prosthetic devices. Artificial teeth, limbs, hearing aids and component parts, eyeglasses and crutches.

(xiii) Psychiatric care. Psychiatric care primarily for alleviating a mental illness or defect; the cost of maintaining a mentally ill individual at a specially equipped medical center where the individual receives continual medical care.

(xiv) Special education for handicapped. Special school for mentally or physically handicapped individuals if for the alleviation of handicap. The costs of meals and lodging, if supplied by the institution, and/or ordinary education furnished incidental to the special services are medical expenses.

(xv) Substance abuse treatment. Treatment at a therapeutic center for drug addicts or alcoholics, including meals and lodging furnished as a necessary incident to the treatment.

(xvi) Transportation for medical/remedial purposes. Transportation essential to medical care, e.g., bus, taxi, train, or plane fares, and forty-seven cents ($0.47) for each mile that the individual's car is used for medical purposes, in addition to parking fees and tolls.

(xvii) Over the counter (non-prescription) medicine. $10.00 per month is deducted for these expenses without verification, using only the applicant's statement. All of these expenses must be verified if the amount is more than $10.00 per month.

6. The following are types of medical expenses that are not considered Countable Medical Expenses for the Medically Needy categories:

(i) Expenses that have been written off as uncollectible or have been forgiven by the provider.

(ii) Expenses that are covered by the state's TennCare Medicaid plan and are incurred during a period of eligibility:

(I) Costs incurred during a period of TennCare eligibility due to co-pays or services not covered such as dental, hearing and eye care for adults are allowable as a medical expense.

(II) Bills incurred during TennCare eligibility which are subject to TennCare reimbursement are not considered outstanding for subsequent spenddown periods even if not paid by TennCare.

(3) ABD Financial Determinations.

(a) Coverage groups whose financial eligibility is determined based on SSI financial methodology are:

1. Individuals applying for SSI-Related categories.

2. MSP Applicants.

3. Individuals applying for coverage of LTSS, under the Institutional Eligibility category.

(b) Income Determinations. Income countable for purposes of individuals described in this paragraph is defined at 20 C.F.R. §§ 416.1100, et seq., and as set forth below, except gross income, under the Institutional Eligibility category, in accordance with 42 C.F.R. § 435.1005, does not take into account the income exclusions under 20 C.F.R. § 416.1112 and 20 C.F.R. § 416.1124, unless specified under another Federal statute. Unless otherwise specified in this rule, these individuals are subject to the following income requirements:

1. ABLE Accounts. Contributions made by a third party, including a trust, and ABLE account earnings are excluded, except that contributions are not deducted from countable income of the individual making the contribution. Distributions from an ABLE account are not income of the designated beneficiary in any month regardless of whether the distribution is for non-housing QDEs, housing QDEs or non-qualified expenses. Distribution from an ABLE account is the conversion of a resource from one form to another.

2. Adoption Subsidies. Countable to the child if intended for general living expenses. Excluded if for reimbursement of child care while the adult responsible for the child is at work or seeking employment, or for medical expenses.

3. Alimony. Countable.

4. Americorps and Americorps NCCC. Cash or in-kind payments are excluded.

5. Annuity Payments. If the underlying annuity is an excluded resource, the periodic payments are countable unearned income. If the underlying annuity is a countable resource, payments are excluded. Payments are also excluded if an annuity is paid by a state to an individual or spouse based on the state's determination that the individual is a veteran who is aged, blind or disabled.

6. Bonuses. Countable.

7. Care and Contribution in Exchange for a Transferred Asset. Countable.

8. Canceled Debts. Excluded.

9. Capital Gains. Countable.

10. Cash Support. Countable, unless excluded as irregular or infrequent income.

11. Child Support Arrearage. Countable to the child(ren) the payments are intended to support. Exclude one-third (1/3) of the child support arrearage payment paid by an absent parent to or for an eligible child under age 18 or under age twenty-two (22) if a student regularly attending school. The one-third (1/3) exclusion does not apply to ineligible children.

12. Child Support Payments. Countable to the child(ren) the payments are intended to support. Exclude one-third (1/3) of the child support payment paid by an absent parent to or for an eligible child under age 18 or under age twenty-two (22) if a student regularly attending school. The one-third (1/3) exclusion does not apply to ineligible children.

13. Commissions. Countable.

14. Combat Pay. Excluded.

15. CSIMA. Countable as unearned income only when the institutionalized individual is not in the community spouse's household.

16. Contractual Payments. Countable.

17. Death Benefits. Countable income to an individual if the total amount exceeds the expense of the deceased person's last illness and burial paid by the individual to whom the death benefit is issued.

18. DIMA. Countable as unearned income only when the institutionalized individual is not in the dependent's household.

19. Differential Payments. Countable.

20. Domestic Volunteer Service Act Payments. Payments made to volunteers under the Domestic Volunteer Service Act are excluded, unless the Corporation for National and Community Service (CNCS) determines that the value of the payments, based on the number of hours served, are equal to or greater than the federal or state minimum wage where the volunteer is serving, whichever is higher. This includes payments made to foster grandparents, senior companions, and persons serving in the Retired Senior Volunteer Program (RSVP) and Americorps VISTA.

21. Earned Income Tax Credits. Excluded.

22. Earned In-Kind Not Food or Shelter. Excluded.

23. Earned In-Kind Wages. Countable.

24. Educational Income. Excluded. Includes: Pell Grants, Federal SEOG, Federal Student Loans, State Student Incentive Grants, Work Study, and any student financial assistance received under Title IV of the Higher Education Act of 1965, as amended, or under Bureau of Indian Affairs education assistance programs. Other grants, scholarships, fellowships, or gifts are excluded to the extent they are used or set aside for educational expenses.

25. Farming/Fishing Income. Countable.

26. Gambling Prizes and Awards. Countable.

27. Gifts. Countable.

28. Income Not Pursued. Countable.

29. Income Produced from Resources. Income generated by a resource that is excluded is countable unearned income. Income generated by a resource that is countable is excluded as income.

30. Inheritance Cash. Countable.

31. Interest Income. Interest earned on a countable resource is excluded as unearned income. Interest earned on an excluded resource is countable as income, unless specifically excluded under a Federal statute.

32. Interest on Excluded Burial Arrangements, Funds, and Spaces. Excluded.

33. Irregular or Infrequent Income. Exclude up to $60.00 per calendar quarter of unearned income when it is received infrequently or irregularly. Exclude up to $30.00 per calendar quarter of earned income when it is received infrequently or irregularly.

34. Jury Duty Pay. Countable unless the income is turned over to an applicant's employer.

35. Long Term Care Insurance Payments. Countable if the payment is not assigned or provided to the nursing home, HCBS provider, or MCO.

36. Military Allowances. Countable. The basic allowance for housing (BAH) is counted as earned income when the payment is made to military personnel living in private housing. The BAH should be treated as unearned income in the form of in-kind support and maintenance (ISM) subject to the Presumed Maximum Value (PMV) rule for service members and their families who live on base or in privatized military housing.

37. Older Americans Act Payments. Count only wages or salaries.

38. PASS Payments. Any earned or unearned income received and used to fulfill an approved plan to achieve self-support is excluded.

39. Payments from FEMA. FEMA payments issued as a result of a presidentially declared emergency or major disaster are excluded. Payments made by comparable disaster assistance programs by States, local governments and disaster assistance organizations are also excluded. FEMA payments which are made to a household to pay for rent, food and utility assistance when there is no major disaster or emergency declaration are countable.

40. Pensions. Countable.

41. Protective Payee Payments. Funds received by a protective payee (conservator, authorized representative or representative payee) and used for the care and maintenance of a third party beneficiary (adult or child) who may or may not be a member of the protective payee's household are excluded as income to the protective payee. Any part of the payment that is retained by the protective payee for her own use is countable income to the protective payee. Even if the protective payee retains a fee for her services, the entire payment issued on behalf of the beneficiary is countable income to the beneficiary.

42. Rental or Lease Income. Countable as earned income when the individual is in the business of renting or leasing property, i.e., self-employment. Countable as unearned income when the individual is not in the business of renting or leasing property. Count the amount of income remaining after expenses related to maintaining the property are applied.

43. Royalties and Honoraria. Countable.

44. Self-Employment. Net earnings are countable.

45. Settlements or Disaster Payments. The following settlements and disaster payments are excluded as unearned income:

(i) Agent Orange Settlement Payments (and interest from payments);

(ii) Disaster Relief Assistance received under the Disaster Relief Act of 1974;

(iii) Distribution of perpetual judgment funds to Indian tribes under the following:

(I) Indian Judgment Funds Distribution (P.L. 93-134)

(II) Black Feet and Gros Ventre Tribes (P.L. 92-254)

(III) Grand River Band of Ottawah Indiana in Indian Claims Commission Docket No. 40-K;

(IV) Tribes or groups under P.L. 93-134;

(V) Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation (P.L. 95-433); and

(VI) Receipts from land held in trust by the Federal government and distributed to certain Indian tribes under P.L. 94-114.

(iv) Factor VIII or IX Concentrate Blood Products Litigation. The settlement payments (and interest from payments) made as a result of the class action lawsuit to hemophilia patients infected with HIV through blood plasma products;

(v) Filipino Veterans Compensation Fund Payments. Lump sum payments (and interest from payments) made to certain veterans and spouses of veterans who served in the military of the Government of the Commonwealth of the Philippines during WWII;

(vi) Japanese-American and Aleutian Restitution Payments (and interest from payments);

(vii) Payments made to individuals because of their status as victims of Nazi persecutions (and interest from payments);

(viii) Payments to children born of Vietnam veterans diagnosed with spina bifida (and interest from payments);

(ix) Payments made under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (interest is not excluded);

(x) Revenues from the Alaska Native Fund paid under section 21(a) of the Alaska Native Claims Settlement Act; and

(xi) Criminal Victims Compensation Funds paid to crime victims.

46. Severance. Countable.

47. Sheltered Workshop Payments. Countable.

48. Sick/Disability Payments. Countable.

49. Social Security Payments. Countable.

50. Social Service Payments. Excluded.

51. SSI. Excluded.

52. Temporary Disability Insurance. Income is countable as unearned income to the extent it is not a reimbursement for specific costs and is paid directly to the household.

53. Tips. Tips that total more than $20.00 in a calendar month from any one employer are countable earned income. Tips totaling less than $20.00 in a calendar month are countable unearned income.

54. Trusts. Dividends, interest, rents and other income generated by a trust fund, unless otherwise excluded, that can be paid to the beneficiary or to a third party on the beneficiary's behalf are countable income to the beneficiary for the period the fund is intended to cover, beginning the month the funds become available, regardless of whether the income is actually paid out to the beneficiary. When funds are withdrawn irregularly, the payments are countable in the month received.

(i) Monies withdrawn from the principal of an accessible (countable) trust fund are excluded as income to the beneficiary, because an accessible trust fund is a countable resource. Money cannot be considered income and a resource in the same month.

(ii) Monies disbursed from the principal of an inaccessible trust fund are counted as income because an inaccessible trust fund is an excluded resource.

(iii) Monies received by the trustee of a trust and used for the care and maintenance of a third party beneficiary (adult or child) are excluded as income for the trustee.

55. Unearned In-Kind Income or In-Kind Support and Maintenance. Unearned In-Kind income in the form of food and/or shelter may be countable or excluded depending on the source. If countable, it is subject to either the Value of the One-Third Reduction (VTR) rule or the Presumed Maximum Value (PMV) rule.

56. Unearned In-Kind Income, Not Food or Shelter. Excluded.

57. Unemployment Compensation. Countable.

58. U.S. Department of Veterans Affairs Payments:

(i) Aid and Attendance and Housebound Allowances. Excluded.

(ii) Apportioned. Payments made to a dependent spouse, child, or parent are countable for the individual to whom the benefits are paid.

(iii) Augmented Benefit. Payments received on behalf of a dependent spouse, child, or parent are countable for the individual for whom the benefits are paid.

(iv) Compensation. Countable.

(v) Death Benefit. Countable as unearned income to an individual if the total amount exceeds the expense of the deceased person's last illness and burial paid by the individual to whom the death benefit is issued.

(vi) Dependency and Indemnity Compensation (DIC). Countable.

(vii) Educational Benefits. Excluded.

(viii) Payments for Unreimbursed Medical Expenses. Excluded.

(ix) Pension. Countable. If an institutionalized veteran receives a VA improved pension limited to $90.00 per month, the VA pension is excluded.

59. Wages. Countable.

60. Workers' Compensation. Countable as unearned income to the extent it is not an expense attributable to obtaining the compensation.

61. WIOA Payments. Countable, unless the payments are for supportive services, such as child care, transportation, or job placement services. Wages earned by a student in the Job Corps program may be excluded under the student earned income exclusion.

62. Work Study Payments. Excluded.

(c) Resource Determinations. Resources countable for purposes of individuals described in this paragraph are defined at 20 C.F.R. §§ 416.1201, et seq. Unless otherwise specified below, individuals described in this paragraph are subject to the following resource requirements:

1. ABLE Accounts. Distributions from an ABLE account are excluded if used or intended to be used for QDEs as long as the distributions are identifiable. Distributions from an ABLE account used for non-qualified expenses are excluded if spent in the month of receipt. Distributions from an ABLE account are countable as a resource when:

(i) Distributions are retained past the month of receipt and are used for or intended to be used for non-qualified disability expenses; or

(ii) Distributions are retained past the month of receipt and were previously excluded because intended for a QDE, but used for a non-qualified expense. Count the amount of funds used as a resource the first of the month in which funds were spent; or

(iii) Distributions are retained past the month of receipt, have not been spent, and the intent to use the funds for a QDE has changed. Count the retained funds as a resource the first of the following month.

(iv) Qualified disability expenses (QDE) are expenses related to the blindness or disability of the designated beneficiary and for the benefit of the designated beneficiary. In general, a QDE includes, but is not limited to: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, funeral and burial expenses, and basic living expenses.

2. Annuities are countable resources for individuals when accessible according to 20 C.F.R. § 416.1201. An annuity is a countable resource when it is revocable, assignable, or can be sold.

(i) If the annuity is an excluded resource, payments being received from the annuity will be countable unearned income, except as excluded at Subpart (v). If the annuity is a countable resource, any payments being received from the annuity are excluded.

(ii) Generally, annuities are revocable while in the accumulation phase though an owner will not receive a full refund, unless the annuity is cancelled during the free-look period. Once an annuity has been annuitized, the annuity is excluded as a resource if the funds are unavailable in a lump sum.

(iii) The countable value of an annuity during the free-look period is the purchase value. The countable value of an annuity during the accumulation phase is the cash value minus any withdrawals and surrender charges or penalty fees for early withdrawal. If an annuity contains a provision that allows an individual to cash in a contract after annuitization, the countable value of the annuity is the commuted cash value, i.e., the present value of all future payments.

(iv) Distributions from an annuity, such as systematic withdrawals and required minimum distributions (RMDs), are considered conversions of a resource rather than income.

(v) Any amount of an annuity held following the month of receipt is a countable resource, except when an annuity is a state annuity for certain veterans. A state annuity is an annuity paid by a state to an individual or an individual's spouse based on the state's determination that the individual is a veteran who is aged, blind or disabled.

(vi) Annuities that are funded by a pension or a retirement fund held by an employer or union should not be counted as a resource, while the individual is employed, if termination of employment would be necessary to access the funds.

(vii) Individuals applying for or receiving LTSS must meet additional requirements regarding asset transfers and exclusion of annuities at Rule .06(3)(h).

3. Business or Self-Employment. Excluded as essential for the production of earned income. Resources may include:

(i) Tools/equipment;

(ii) Stock or raw materials;

(iii) Personal property essential for income production;

(iv) Real property;

(v) Office equipment;

(vi) Business loans for the purchase of capital assets;

(vii) Inventory;

(viii) Machinery and equipment;

(ix) Business/commercial checking accounts; and

(x) Life insurance.

4. Burial Funds.

(i) Burial funds which are not commingled are excluded resources when:

(I) The funds are used to purchase a life insurance policy which is then irrevocably assigned to a funeral provider. Either the ownership of the policy or proceeds may be assigned to the funeral provider. The purpose of the assignment is to fund a burial contract.

(II) The funds are invested in an irrevocable pre-paid or pre-need burial contract established by a funeral provider and the contract meets the following conditions:

I. Both the individual and the funeral home representative have signed the document;

II. An itemized list of the services provided under the contract is provided;

III. The total dollar amount of the agreement is specified;

IV. The individual was neither a minor nor legally declared incompetent when the agreement was signed; and

V. The agreement specifies in writing that the money is not refundable under any circumstances.

(III) The funds are invested in a burial trust established by the individual, and the total funds in the trust, including interest payments, do not exceed $6, 000.00 per individual. Transport costs which cause the trust value to exceed $6, 000.00 are excluded.

(ii) Burial funds are countable resources when:

(I) The funds are used to purchase a life insurance policy and a revocable assignment of the policy or proceeds is made to a funeral provider.

(II) The funds are invested in a revocable pre-paid or pre-need burial contract established by a funeral provider.

(III) Countable burial funds are eligible to be excluded as part of the individual's burial reserve.

(iii) Burial Reserve. An individual is allowed to set aside $1, 500.00 in resources to cover expenses connected to her burial, cremation or other funeral arrangements. Funds allowed to be excluded as part of the burial reserve include revocable, countable burial funds. These funds must not be commingled with other resources, and must be set aside for burial expenses. The $1, 500.00 maximum amount of the burial reserve is first reduced by:

(I) Life insurance, if the total value of all life insurance owned by the individual is $1, 500.00 or less; and

(II) Funds in an irrevocable burial agreement or contract.

5. Burial Plots. Exclude the value of one burial space for each family member, e.g. spouse, child, parent, sibling, whether living in the home or not. Burial plots and spaces include a gravesite, crypt, mausoleum, niche or other repository for bodily remains, vaults, headstones, markers, plaques, containers and arrangement for opening and closing the gravesite.

6. Cash. Countable.

7. Certificates of Deposit (CD). Countable if held in a personal account. The value of a CD is the net amount that could be received after penalties for early withdrawal, if applicable. Taxes are not deducted in determining net value.

8. Checking Accounts. Personal checking accounts are countable. Some checking accounts that may be excluded include those designated for burial needs, educational income, Individual Development Accounts, PASS, prorated as income, proceeds from the sale of a home, disaster or settlement funds if excluded by policy, and retroactive SSA payments.

9. CCRC Deposit or Fee. The value of an entrance fee paid to a CCRC is a countable resource when it meets the following conditions:

(i) The entrance fee can be used to pay for care under the terms of the entrance contract should other resources of the individual be insufficient;

(ii) The entrance fee or its remaining portion is refundable when the individual dies or terminates the contract and leaves the CCRC; and

(iii) The entrance fee does not confer any ownership interest in the community.

10. Contracts for Deed or Mortgage. The value of a contract for deed or mortgage may be a countable asset dependent on the circumstances of the loan, including the individual's role as lender or borrower and the accessibility of the asset.

(i) When the individual is the lender for a contract for deed, the lender may sell or transfer the instrument to have immediate access to the unpaid principal. The value of the contract is the unpaid loan principal. Any portion of a payment that represents the loan principal is a conversion of a resource. Any portion of the payment that represents interest is considered unearned income in the month of receipt and a resource thereafter. The value of the contract may be excluded from the countable resources if the individual can demonstrate that the contract cannot be sold without his realizing a net loss.

(ii) If the individual is the borrower the property agreement is not a resource. However, the property purchased may be a countable resource following the month of transaction.

11. Educational Income.

(i) Educational income received under Title IV of the Higher Education Act or under the Bureau of Indian Affairs is excluded as a resource.

(ii) Any portion of a VA educational benefit that is a withdrawal of a veteran's own contribution is a countable resource if retained in the month following the month of receipt.

(iii) Other grants, scholarships, fellowships and gifts intended to pay for tuition, fees or educational expenses are excluded for nine (9) months beginning the month after the funds are received. The individual must be enrolled in school and attending classes to be considered a student.

12. Farm, Business, Other Equipment. The equity value of non-self-employment income-producing real property, other than the homestead, is a countable resource. Exclude up to $6, 000.00 in equity and count only the amount that exceeds the limit, if the net income totals at least six percent (6%) of the equity value. If the property is used for self-employment, it is excluded as Business or Self-Employment.

13. Rental property is countable if the individual who owns the property is not in the business of' renting property. Someone who is in the business of renting property is someone who materially participates in the operation and decision making of the rental business for at least (20) hours per week.

14. Homestead Exclusion. The entire value of the home, whether on land or water, all adjoining land not separated by property owned by others and any related outbuildings are excluded in determining resource eligibility as long as:

(i) The home is the principal place of residence for the individual and/or his spouse and/or dependent relatives; and

(ii) If the individual resides in a long-term care facility, his intent to return to the home is established.

(iii) For an institutionalized individual, the home is excluded if Subparts (i) and (ii) above are true and the individual's equity interest does not exceed the home equity limit established by CMS, with one exception: the home equity limit does not apply to an institutionalized individual if the spouse of the individual, the individual's child under age twenty-one (21), or a blind or permanently and totally disabled child is residing in the home. An institutionalized individual whose home exceeds the home equity limit established by CMS and who does not have a spouse, a child under age twenty-one (21) or a disabled or blind child living in the home, is not eligible for payment of long term services and supports, unless it is determined undue hardship exists.

(iv) An individual must have lived in the home for it to be considered his home or principal place of residence.

(v) The value of the home and surrounding land will not be counted as a resource during the individual's absence from an unoccupied home when he intends to return to the property. An absence from the home can be necessary to accomplish a specific purpose such as hospitalization, confinement in a nursing home or receipt of services, such as nursing or personal care services not available to the individual in his home.

(vi) An intent to return home is nullified by any efforts to sell or dispose of the property during the exemption period. The exemption based on the intent to return ends the first day of the month after the month efforts are made to sell or dispose of the homestead property.

(vii) Rental of a homestead which has been excluded because of intent to return does not nullify the exclusion. The homestead retains the exclusion as long as there is a clear, non-contradictory intent to return, and no efforts are made to sell or dispose of the property. The rent will be counted as unearned income in the month received.

(viii) The exemption based on residence of the enrollee's dependent relative ends the first day of the month after the relative last lived in the homestead, if the relative does not intend to return. Real property located outside of Tennessee can be excluded from countable resources as homestead property, if there is substantiation of the individual's intent to return to the home or the property is the principal residence of the individual's spouse or dependent relatives.

15. Individual Development Account. Funds, including accrued interest, in the account are excluded as a resource as long as the individual complies with the IDA eligibility rules and continues to maintain or make contributions into the account.

16. Income-Producing Resource. Exclude up to $6, 000.00 of an individual's equity in an income-producing resource if it produces a net annual income to the individual of at least six percent (6%) of the property's equity value. If the individual's equity value is greater than $6, 000.00, the amount that exceeds $6, 000.00 is countable towards the resource limit.

(i) If an income-producing resource does not produce a net annual income of at least six percent (6%) of the resource's equity value, the entire equity value of the resource is countable.

(ii) If the individual owns more than one piece of income-producing resource and each produces income, each is reviewed to determine whether the six percent (6%) test is met. Then the amounts of the individual's equity in all of those properties producing six percent (6%) are totaled to determine if the total equity of all properties is $6, 000.00 or less. If the total equity value in the properties that meet the six percent (6%) rule is over the $6, 000.00 equity limit, the amount exceeding $6, 000.00 is counted as a resource.

17. Insurance. Exclude Sick and Disability Insurance and Burial Insurance.

18. Items of Unusual Value, Household Goods, and Personal Effects. In general, an item may be considered an item of unusual value if the item is not excluded as a household good or personal effect, and the equity value of the item is greater than $500.00. An item of unusual value that generates income for the individual is countable. The countable value is determined by applying the Rate of Return test (see Income-Producing Resource above). A personal item of unusual value is excluded. Household Goods and Personal Effects are also excluded.

19. Life Estates. Property in which an individual holds a life estate is subject to the same exclusion rules as property the individual owns by title, subject to the following exceptions:

(i) A life estate will be excluded as the home when the property meets the homestead exemption.

(ii) If the property is used in the passive production of income, then the life estate is subject to the Rate of Return test (see, Income-Producing Resource above).

(iii) A life estate will be excluded when ownership is necessary for the production of earned income.

(iv) The terms of the life estate contract prevent the holder from selling his interest in the property.

(v) If the life estate is not excluded based on the criteria (i)-(iv) above, the entire value of the life estate is a countable asset. The life estate value is determined by multiplying the Fair Market Value (FMV) of the property by the percentage listed in the SSA's Life Estate and Remainder Interest Tables for the age of the individual on whose lifetime the life estate is based. If more than one person owns the life estate, the value is based on the owner with the longest life expectancy.

(vi) When an individual purchases, or, in some other way receives, as compensation in a transaction, a life estate in another individual's home, the purchase of the life estate is considered an asset transfer subject to penalty, unless the individual then lives in the home for a period of at least one year after receiving the life estate.

(vii) If the individual does live in the home for a period of one year after receiving or purchasing the life estate, then the amount of the transfer is the entire amount used to purchase the life estate.

(viii) If an individual purchases a life estate in another individual's home and then lives there for one year after the purchase, the life estate is an excluded resource while being used as the individual's (or the individual's spouse's) home. However, if payment for a life estate exceeds the FMV of the life estate the difference between the amount paid and the FMV should be treated as an asset transfer. In addition, if an individual makes a gift or transfer of a life estate interest, the value of the life estate should be treated as a transfer of assets.

20. Life Insurance. Countable or excluded based on the type of life insurance owned by the individual and its intended use. Exclude all life insurance if the total face value of all policies does not exceed $1, 500.00 per owner.

21. Livestock. The value of livestock necessary for business or self-employment, as a tool of the trade, or raised for home/personal consumption is an excluded resource. Income received is countable as self-employment income. The equity value of livestock that are pets is countable. Livestock that is used as non-business income-producing property is countable, and subject to treatment as an Income-Producing Resource as described in this subparagraph.

22. Oil and Mineral Rights. May be included with land ownership or owned separately. If surface rights of the same property are excluded (for example, as a home) so are oil and mineral rights. Oil and mineral rights are countable when owned for personal use, or when the surface rights of the same property are countable (non-homestead, real property).

(i) If oil or mineral rights are producing income under a lease agreement, the owner may be constrained from selling or otherwise disposing of those rights. If the land is already excluded, the oil and mineral rights are excluded.

(ii) If oil or mineral rights are producing income to the individual, and he is not actively engaged in the production of income, the equity value of the rights is subject to the Rate or Return test. See Income-Producing Resource above.

23. Patient Trust Account. The balance of the account at the time of application and redetermination is a countable resource.

24. Personal Resource. Countable unless excluded based on the terms of the asset. A personal resource is typically for the use of the individual and his family.

25. Personal Consumption. Exclude up to $6, 000.00 of the equity value of non-business property currently in use to produce goods or services essential to daily activities. Any portion of the property's equity value in excess of $6, 000.00 is a countable resource.

26. PASS. Any income an SSI recipient places in an approved PASS account is excluded as a resource. The PASS account itself is also excluded. This exclusion expires when the PASS contract expires or ends, or when the individual is no longer an SSI recipient.

27. Prepayment of Rent. Countable unless the individual cannot receive the money back under any circumstances (i.e., the lease agreement includes a no refund policy, or the landlord provides a statement that the funds will not be returned to the renter). Prepayment of an applicant's mortgage is not considered a resource.

28. Prepayment of Nursing Home Care. Prepayment for care deposited by an applicant upon his admission to a TennCare Medicaid-participating long-term care facility is a countable resource for the individual who is subsequently approved for TennCare Medicaid benefits if the deposit was paid from the individual's own funds.

29. Proceeds from the Sale of a Home. Excluded to the extent that the funds are intended to be used to purchase another home subject to the homestead exclusion, and the funds are used for such a purpose within three (3) months of the date of receipt of the proceeds.

30. Promissory Notes and other Loans. A promissory note or other loan given by the household is considered personal property and is countable, unless the note/loan balance is inaccessible or the promissory note is held for reasons other than personal use. The lender holds legal interest and has the legal ability to make available his share in the note or loan. The equity value of the note/loan is countable.

(i) If a household makes a loan that is considered inaccessible, or is shown to have a significantly lower market value than the unpaid balance of the loan, the loan will be considered to be an uncompensated transfer of assets. The uncompensated asset transfer will be considered to be the outstanding balance due on the loan as of the date of the lender's application for long term services and supports (nursing facility or HCBS services).

(ii) In addition, the Deficit Reduction Act of 2005 (DRA) provides that funds used to purchase a promissory note, loan or mortgage must meet the following criteria, or the purchase will be treated as a transfer of assets for less than FMV:

(I) The repayment term must be actuarially sound (as determined by SSA standards);

(II) Payments must be made in equal amounts during the term of the loan with no deferral payment and no balloon payments; and

(III) The promissory note, loan or mortgage must prohibit the cancellation of the balance upon the death of the lender.

(iii) If the above criteria are not met, the purchase of the promissory note or loan must be treated as a transfer of assets. The amount used to calculate a penalty will be the outstanding balance of the loan due as of the date of application for TennCare Medicaid.

(iv) Promissory notes that are made for purposes other than personal use are treated according to their use. Promissory notes may be made for the following purposes:

(I) Burial;

(II) Business or Self-Employment; and

(III) Proceeds from the Sale of a Home.

31. Property that represents government authority to engage in an income-producing activity. Excluded if the property is used in trade, business or non-business income-producing activity. Exclude property that is currently not in use due to circumstances beyond the individual's control and there is a reasonable expectation that the use will resume.

32. Prorated as Income. Excluded.

33. Qualified Tuition Savings Plan (529 Plans). Countable minus any early withdrawal penalties.

34. Real Property. The equity value in all real property the individual owns individually or jointly is a countable asset with the following exceptions:

(i) Property excluded as homestead;

(ii) The inaccessible equity value of real property;

(iii) Equity value of income-producing property (subject to the Rate of Return test);

(iv) Real property necessary for the production of earned income (see Business or Self-Employment); and

(v) Property excluded under a Conditional Assistance agreement between the individual and the State.

35. Retirement Funds. Retirement funds owned by an individual and held in an IRA, 401(k), or other work-related plan are resources if an individual has the option of withdrawing funds in a lump sum. The value of a retirement fund is the amount of money that the individual can currently withdraw less any penalty for early withdrawal. Retirement funds are not counted as resources if termination of employment is necessary to access the funds or an individual is eligible for and receiving periodic benefits (e.g., pension or annuity). Distributions and systematic withdrawals from a retirement account are conversions of a resource rather than income when an individual can withdraw any of the remaining account balance in a lump sum. Retirement funds are excluded from deeming if owned by an ineligible spouse or an ineligible parent (for non-institutional categories only).

(i) Funds held in a 401(k) or 403(b) retirement account are countable when an individual is no longer job-attached. Funds in a 401(k), part of a profit-sharing plan or stock bonus plan, or in a 403(b) retirement account are also countable when an individual reaches age 59 ½.

(ii) Funds held in an IRA are considered accessible any time. Count the equity value of an accessible IRA when determining eligibility. An IRA held in the form of an annuity will be evaluated as an annuity.

(iii) A Keogh plan established for a self-employed individual is considered accessible and is counted as a resource to the individual even if the household is not actually accessing the funds.

(iv) If the accessibility of a retirement fund cannot be determined based on the documentation received, the summary plan description or a written statement from the plan administrator shall be requested.

(v) Retirement funds are considered nonliquid resources unless there is evidence to suggest otherwise. An individual with excess retirement funds who is otherwise Medicaid-eligible may qualify for conditional assistance while waiting for retirement funds to become available, if the individual agrees in writing to use the funds to repay the medical assistance he received during the conditional assistance period.

36. Savings Accounts. Countable if it is characterized by personal use. If the current month's income has been deposited into the account it must be excluded when determining the current value of the account. A savings account may be excluded if it is used for one of the following purposes:

(i) Burial funds;

(ii) Business or Self-Employment;

(iii) Educational Income;

(iv) Individual Development Account;

(v) PASS;

(vi) Proceeds from the Sale of a Home (subject to time limits);

(vii) Prorated as income;

(viii) Settlement or Disaster Payment, if excluded by policy; and

(ix) SSI/SSA Retroactive Payment (subject to time limits).

37. Settlement or Disaster Payment. Payments or benefits provided under certain Federal statutes are excluded, if payments are not commingled with other funds. Excluded settlement and/or disaster payments include:

(i) Agent Orange Settlement Payments;

(ii) Disaster Relief Assistance received under the Disaster Relief Act of 1974;

(iii) Distribution of perpetual judgment funds to Indian tribes under the following:

(I) Indian Judgment Funds Distribution (P.L. 93-134);

(II) Black Feet and Gros Ventre Tribes (P.L. 92-254);

(III) Grand River Band of Ottawa Indians in Indian Claims Commission Docket No. 40-K;

(IV) Tribes or groups under P.L. 93-134;

(V) Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation (P.L. 95-433); and

(VI) Receipts from land held in trust by the Federal government and distributed to certain Indian tribes under P.L. 94-114.

(iv) Factor VIII or IX Concentrate Blood Products Litigation. The settlement payments made to hemophilia patients infected with HIV through blood plasma products as a result of the class action lawsuit;

(v) Filipino Veterans Compensation Fund Payments. Lump sum payments made to certain veterans and spouses of veterans who served in the military of the Government of the Commonwealth of the Philippines during WWII;

(vi) Japanese-American and Aleutian Restitution Payments;

(vii) Payments made to individuals because of their status as victims of Nazi persecutions;

(viii) Payments to children born of Vietnam veterans diagnosed with spina bifida;

(ix) Payments made under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (State and local payments are only excluded for nine (9) months);

(x) Revenues from the Alaska Native Fund paid under section 21(a) of the Alaska Native Claims Settlement Act;

(xi) Criminal Victims Compensation Funds paid to crime victims (excluded for nine (9) months); and

(xii) Energy Employees Occupational Illness Compensation Program Act (EEOICPA).

38. SSI/SSA Retroactive Payment. Excluded for nine (9) months after the payment is received and counted after that nine (9) month exclusion period.

39. Stocks/Bonds/Mutual Funds. Countable. Although personal mutual funds are countable, those held for purposes listed below are subject to different treatment:

(i) Burial;

(ii) Business or Self-Employment;

(iii) Educational Income;

(iv) Proceeds from the Sale of a Home;

(v) Prorated as Income; or

(vi) Settlement or Disaster Payment, if excluded by policy.

40. Tools of the Trade. Excluded.

41. Trusts. Countable or excluded based on the nature of the trust, the date the trust was created, the source of funds used to create the trust, plus other factors as specified in 42 U.S.C. § 1396p(d).

42. Vehicles. One car, truck, motorcycle, camper, motor home, aircraft, snowmobile, watercraft, boat, or all-terrain vehicle is excluded regardless of its value if it is used for transportation of the individual or a member of his household. If an applicant owns more than one vehicle, the equity value of that second vehicle is countable when it is owned by the applicant or a deemed filing unit member, and it cannot be excluded under another provision. Boats, motorcycles, snowmobiles, jet skis, ATVs, and aircraft are generally considered recreational vehicles. The equity value of these recreational vehicles is a countable resource unless it can be excluded under other provisions.

(d) Conditional Assistance. Nonliquid resources, which are not exempt under another resource provision, are exempt as a resource if the individual enters into a Conditional Assistance agreement with the State. Nonliquid resources include real and personal property that cannot be converted to cash within twenty (20) days. The individual must make a bona fide effort to dispose of the excess nonliquid resources at current market value, and use the proceeds to repay the State for medical expenses covered by TennCare during the period of conditional assistance.

1. The exclusion period for real property is not to exceed nine (9) months. The exclusion period for personal property is not to exceed three (3) months, however a three (3) month extension may be granted if the individual is able to show a good cause for failure to dispose of the property. Property that remains unsold at the end of the exclusion period will be considered inaccessible so long as the individual continues the bona fide effort to sell.

2. Repayment of medical expenses covered by TennCare during the period of conditional assistance may not exceed the total net proceeds of the sale. Any proceeds remaining after the repayment of medical expenses is paid are considered a resource.

(e) Disregards and Expenses Allowed. Unless otherwise specified in Subparagraph (f) below, individuals described in Subparagraph (a) are subject to the following expense requirements.

1. Child Support Disregard. One-third (1/3) of child support payments (including child support arrearages) paid by an absent parent to or for a child under age 18, or under age twenty-two (22) and a student regularly attending school, is excluded per month.

2. General Deduction. A $20.00 monthly General Deduction is allowed per household, and is applied to unearned income. If any of the $20.00 deduction is not offset by unearned income, the remainder is applied to the spouse's unearned income and then to the applicant or enrollee's earned income.

3. Student Earned Income Exclusion (SEIE). Applies to the earnings of an individual who is under age twenty-two (22) and regularly attending school. The exclusion may apply to an eligible or ineligible individual, child, spouse, or parent(s). The SEIE monthly amount is determined by the SSA. The SEIE does not apply to children attending elementary school.

4. Earned Income Deduction. The first $65.00 of the earned income of each aged, blind or disabled individual is disregarded.

5. Impairment-Related and Blind Work Expenses:

(i) The gross countable earned income of each blind or disabled individual (not living in a medical institution) may be reduced by the amount of expenses attributable to earning the income. The allowable Blind Work Expenses (BWE) and allowable Impairment- Related Work Expenses (IRWE) are not the same. BWE and IRWE apply only to earned income. In order to deduct either BWE or IRWE, the individual must be:

(I) Blind, blind and disabled, or disabled; and under age sixty-five (65), or

(II) Age sixty-five (65) and older; and received SSI payments due to blindness or disability the month before attaining age sixty-five (65).

(ii) These expenses do not apply to the Institutional Medicaid categories. Work expenses must not be payable or reimbursable by a third party, such as Medicaid, Medicare or other insurance.

6. One-Half Disregard. One-half of the remaining earned income in the month is disregarded. This disregard is deducted after Impairment-Related Work Expense (IRWE), but before deducting Blind Work Expenses (BWE).

(f) Mandatory deductions such as FICA and withholding tax on pensions and other unearned income are not included in gross income for Institutional Medicaid and the Medicare Savings Programs.

(g) Household Composition Rules. Household composition for the ABD categories is governed by the FRR principle. Financial responsibility is limited to spouse to spouse and parent to child. Household composition not only determines which income standard to use, but also how FRR income is "deemed" available, and the amount of income "deemed" or available to an individual. See 20 C.F.R. §§ 416.1160, et seq.

1. The following individuals are included in the applicant's household, if living in the same household:

(i) The applicant; and

(ii) The applicant's eligible spouse.

2. For Medicare Savings Programs (MSPs), include dependent children under age 21 in the household.

3. Step-children are considered in household composition when they live in the home and their natural parent is the spouse of the applicant and is included in the applicant's household.

4. Financial eligibility in the SSI-Related categories is determined based on a household size of one or two. Included household members are the applicant and if applicable, his spouse. If there are additional household members, they will be considered in deeming budgets, if appropriate.

5. Parent-to-child deeming applies when a blind or disabled child under age 18 is living with his parent(s), and a portion of the parent's income and resources may be deemed available to the child and counted as unearned income to the child in determining his TennCare Medicaid eligibility. The parent receives income disregards and allocations in order to meet his own needs and the needs of other children that live in the household. The needs of step-parents and step-siblings are also considered when they live in the home with the applicant and natural or adopted parent, and the step-parent is married to the natural or adopted parent. Children for whom a child allocation is received must be unmarried and under age 18, or under age 22 and a student. Child and parental allocations are deducted from the parent's income before any income is deemed to the applicant/enrollee. Parental deeming applies to the following TennCare Medicaid categories:

(i) Medicare Savings Program (QMB, SLMB, QI1 and QDWI); and

(ii) Pickle Passalong.

6. The countable income and resources of an applicant/enrollee's TennCare Medicaid-ineligible spouse living in the home may be deemed available to the applicant/enrollee. Spousal deeming applies when the spouses share a living arrangement, i.e., live in the community or home together. The applicant/enrollee's ineligible spouse is included in the household if the income of the spouse is deemed to the applicant/enrollee. Spousal deeming applies to the following TennCare Medicaid categories, which use SSI financial methodology:

(i) Medicare Savings Program (QMB, SLMB, QI, and QDWI); and

(ii) Pickle Passalong.

7. Financial eligibility for Institutional categories is determined based on a household size of one. The only included household member is the applicant/enrollee. However, the community spouse and dependents do impact budgeting of the post-eligibility treatment of income (i.e. patient liability), and the community spouse's resources are considered in the resource assessment.

(h) Qualifying Income Trusts (QIT) for Institutional Applicants.

1. Individuals who are receiving or will receive nursing facility services or home and community based services (HCBS) offered either through the CHOICES program or through a Section 1915(c) HCBS waiver program and whose income exceeds the Medicaid Income Cap (MIC) may establish a QIT. Funds placed in a QIT that meets the standards set forth below are not treated as available resources or income for purposes of determining the individual's TennCare eligibility.

2. A QIT is a trust consisting only of the individual's pension income, SSI, and other monthly income created for the purpose of establishing income eligibility for TennCare coverage when an individual is or soon will be confined to a nursing facility, HCBS or ICF/IID waiver program offered either through the CHOICES program or through a Section 1915(c) HCBS waiver program.

3. An individual is eligible to establish a QIT if his income is above the level at which he would be financially eligible for nursing facility, HCBS offered either through the CHOICES program or through a Section 1915(c) HCBS waiver program, or ICF/IID care under Medicaid.

4. The amount of income that an applicant/recipient places in a QIT cannot be limited nor can it be counted when testing income against the MIC. However, it is used in determining patient liability during post-eligibility treatment of income. If the applicant/recipient's income that is not placed in a QIT is over the MIC, the individual is not financially eligible for the Institutional category.

5. A valid QIT must meet the following criteria:

(i) The trust must be irrevocable and cannot be modified or amended in whole or in part by the Grantor at any time. However, the Trustee or a court of competent jurisdiction shall have the right and jurisdiction to modify any provision of the trust to the extent necessary to maintain the eligibility of the Grantor for medical assistance.

(ii) Each month the trustee shall distribute the entire amount of income transferred into the Trust except for an amount not to exceed $20.00, or other verified amount, for a QIT maintenance fee.

(iii) The sole beneficiary of the Trust is the individual for whose benefit the Trust is established and the State of Tennessee. The Trust terminates upon the death of the individual, or when the Trust is no longer required to establish TennCare Medicaid eligibility in the State of Tennessee, or if nursing facility care or HCBS is no longer medically necessary for the individual, or if the individual is no longer receiving such services.

(iv) The Trust must provide that upon the death of the individual or termination of the Trust, whichever occurs sooner, the State of Tennessee shall receive all amounts remaining in the Trust up to the total amount of medical assistance paid by the State on behalf of the individual.

(v) Amounts remaining in the Trust that are owed to the State must be paid to TennCare within three (3) months after the death of the individual or termination of the Trust, whichever is sooner, along with an accounting of the payments from the Trust. TennCare may grant an extension if a written request is submitted within two (2) months of the termination of the Trust.

(vi) This Part applies to an income trust established on or after July 1, 2005, and under the hardship provision in Section 1613(e) of the Social Security Act (42 U.S.C. § 1382b(e)). Hardship may be considered to exist when the institutionalized individual or his spouse would have resources in excess of the resource limit, is otherwise eligible, and for whom TennCare Medicaid ineligibility would result in loss of essential nursing care which is not available.

(vii) Allowable payments from the Trust include:

(I) Personal Needs Allowance (PNA). The amount the individual is allowed to retain for his personal needs under TennCare Medicaid policies. As of January 1, 2005, this amount is $50.00 for confinement in a nursing facility or ICF/IID and three hundred percent (300%) of the SSI/FBR for HCBS enrollees and Self-Determination Waiver; and two hundred percent (200%) of the SSI/FBR for the Comprehensive Aggregate Cap (CAC) and Statewide Waivers.

(II) A deduction not to exceed $20.00, or other verified amount, for expenses necessary for managing the trust (i.e. bank charges).

(III) CSIMA or DIMA, if applicable.

(IV) Health Insurance Premiums. Allowed when the individual has health insurance other than TennCare Medicaid (for example, Medicare premium or a Medicare supplement policy).

(V) Incurred Medical Expenses. Payment for types of medical or remedial care recognized under State law, but not covered as medical assistance under TennCare Medicaid.

(viii) Any countable income not placed in the QIT and any Trust income remaining after allowable deductions are made shall be paid monthly to the nursing facility, HCBS provider, or MCO by the individual or from the Trust in an amount not to exceed the Medicaid reimbursement rate. Any excess income not distributed from the Trust shall accumulate in the Trust monthly.

(ix) No other deductions or expenses may be paid from the Trust. Expenses which cannot be paid from the Trust except as specifically provided herein include, but are not limited to, trustee fees, attorney fees and costs (including attorney fees and costs incurred in establishing the trust), accountant fees, court fees and costs, fees for guardians ad litem, funeral expenses, past due medical bills and other debts.

(i) Annuities.

1. Disclosure. Disclosure of annuities is required for all applicants pursuant to 42 U.S.C. § 1396p(e). If an individual or her spouse refuses to disclose information related to an annuity, the individual will be denied Medicaid eligibility based on the individual's failure to cooperate.

2. Annuities and Transfer of Assets. An annuity will not be treated as a transfer of assets if the annuity meets the requirements of 42 U.S.C. § 1396p(c)(1)(G).

3. Requirement to name the State as the Remainder Beneficiary. The purchase of an annuity is subject to the transfer of assets provision unless it meets the requirements of 42 U.S.C. § 1396(c)(1)(F).

(i) Annuities purchased or converted by the individual or his spouse on or after February 8, 2006, must be changed prior to TennCare Medicaid approval or redetermination to name the State of Tennessee as the remainder beneficiary of the annuity. If the individual has a community spouse, or a minor or disabled child, the State may be named in the second position following one of these individuals. If the State is named in the second position following a community spouse or child, the annuity must also provide that the State becomes the remainder beneficiary in the first position if the community spouse, child, or their representative disposes of any of the remainder of the annuity for less than fair market value.

(ii) As a remainder beneficiary, the State may receive up to the total amount of medical assistance paid on behalf of the individual, including both long term services and supports and home and community based services. The State must notify the issuer of the State's right as the preferred remainder beneficiary and the issuer must notify the State if there are any changes in the amount of income or principal being withdrawn.

(iii) An annuity may be amended to meet these criteria, so that the annuity purchase will not be treated as a transfer of assets for less than FMV.

4. Annuity Transactions. Certain annuity transactions may be treated as a transfer of assets for less than fair market value (FMV) according to 42 U.S.C. § 1396p(e).

(i) Annuity transactions made by an individual, or by someone acting on an individual's behalf, are considered improper transfers if any of the individual's assets are disposed of for less than FMV.

(ii) Transactions include any action that changes the course of payments to be made by an annuity or the treatment of the income or principal of an annuity. These actions include additions of principal, elective withdrawals, requests to change the distribution of an annuity, elections to annuitize the contract and other similar actions.

(iii) Routine changes (e.g., notification of an address change or death or divorce of a remainder beneficiary) and changes beyond an individual's control are not considered transfers of assets for less than FMV.

(Emergency rule filed June 16, 2016; effective through December 13, 2016. New rules filed September 14, 2016; effective December 13, 2016. Repeal and new rule filed May 24, 2019; effective August 22, 2019.)

Authority: T.C.A. §§ 4-5-202, 4-5-208, 71-5-105, 71-5-106, 71-5-110, 71-5-111, and 71-5-117.

The following state regulations pages link to this page.